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State regulators wielded influence over the insurance space in 2017

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State regulators wielded influence over the insurance space in 2017

S&P Global Market Intelligence presents a list of the year's most important players, including a state regulator who kept Affordable Care Act markets in her state open and a CEO tasked with reinvigorating a giant P&C insurer, with a look ahead to what could come next for them or their institutions.

Seema Verma, administrator, Centers for Medicare and Medicaid Services

As Republicans in Congress dismantled parts of the ACA, Verma, the federal regulator of health insurance markets, took several actions to undo parts of the law.

At the White House's direction, CMS cut off funding for cost-sharing reductions to insurers, a move that led ACA health plan premium rates to skyrocket.

Verma's agency also cut the amount of time for open enrollment in half under a final rule in April, arguing that doing so would "help stabilize the individual and small group markets."

Months later, CMS slashed the budget for outreach and marketing ahead of the ACA's open enrollment season by 90%.

Those actions led to a decrease of about 400,000 people in enrollment for the ACA federal exchange at the end of the enrollment season.

Brian Duperreault, president and CEO, American International Group Inc.

Duperreault was selected as the embattled insurer's president and CEO in May and navigated the company through the lifting of its too-big-to-fail label.

The Financial Stability Oversight Council tossed the company's systemically important financial institution designation in a 7-2 decision that removed the company's supervision by the Board of Governors and the enhanced prudential standards that came with the label.

After the decision, Duperreault praised the decision, saying the company had successfully de-risked its assets since the 2008 financial crisis.

Trinidad Navarro, insurance commissioner, Delaware

Under Navarro, MetLife Inc. was able to spin off its U.S. retail business into Brighthouse Financial Inc as MetLife worked to shed its own SIFI label.

Navarro said in an interview that after the spinoff hearing officer signed off on the decision and presented his recommendation, his obligation to stay independent was fulfilled and he agreed to the plan.

Now, Brighthouse "appears to be meeting its goals" as a company, Navarro said, after a recent meeting with executives where they presented a plan to "simplify" the insurance products Brighthouse offers.

As the chief regulator of insurance in the state, Navarro said, he is proud that 95% of Delaware citizens have health insurance. And while the ACA is not perfect, Delaware was able to keep some of the major consumer protections in the ACA intact in the state, he said.

But he warned that health insurance markets could falter in the coming years.

"You're going to see in the next couple years millions of people with no options," Navarro said. "We're going to see a significant drop in our state and across the country," he added, because of the uncertainty CMS and the White House have created for the industry.

Barbara Richardson, insurance commissioner, Nevada

Over Richardson's desk hangs a printed picture of a map showing most of her state without a health insurer offering ACA plans, a reminder of the near-collapse of the state's ACA marketplace in 2017. She said it motivates her to "continue to fight," find ways to keep Nevadans insured and prevent "bare" counties where consumers cannot buy policies through the health insurance exchange.

After Anthem Inc. withdrew from the state's ACA exchange, Richardson said her office scrambled to find an answer to keep citizens insured. She leveraged a deal with Centene Corp. by connecting the company to an existing provider network.

"It's a reminder to keep on focusing on the goal," Richardson said in an interview. "We don't let a week go by without asking what more we can do. We've talked to some of our sister states and it keeps me focused on the long-term."

She hopes no bare counties will reappear in her state, but because of regulatory uncertainty, she is in talks with more insurers to offer ACA plans on the state's exchange.

"We're focusing on ideas and increasing the number of market players," Richardson said. "And I would suggest there are going to be one or two bare counties next year because it is still unstable."

Joseph White, CFO, Molina Healthcare Inc.

After Molina Healthcare's board ousted Chairman, President and CEO Joseph Mario Molina and CFO John Molina, Chief Accounting Officer Joseph White was named CFO and interim CEO of the company as he led the search for a replacement.

Jefferies equity analyst David Windley said in an interview that White held the company together fulfilling so many roles.

"I thought it was asking a lot of him to step into the role that he did," Windley said. "And prior to having hired the current CEO, having to [oversee] the significant cost-cutting and headcount reduction was also asking a lot of a guy who had been chief accounting officer."

Ultimately, the company named Joseph Zubretsky to president and CEO of the company in early October.

"He stepped into what was a messy process and contentious period," Windley said of White. "To handle the cost-cutting and right-sizing of the business was a significant step."

Maria Vullo, superintendent, New York Department of Financial Services

Vullo managed to implement regulations on insurance companies to protect consumers' data against cybersecurity breaches in her home state. Months later, the National Association of Insurance Commissioners adopted a model law for other states to deploy.

The model law establishes a single standard for data security in the insurance industry and sets guidelines for investigations and notifications of a breach.

Vullo said in an interview that she is confident companies will comply with the new standard and that it will make consumers' data and the industry as a whole more secure.

"There a lot of firms that have cyber protections," Vullo said. "This is bringing everyone up to minimum standards."

Even so, Vullo expects more breaches to come.

"I can't say what the number of breaches will be, but the whole point is to to prevent this. It's very difficult to deal with nation-state actors," Vullo said of foreign entities she suspected of being behind some attacks.

She said the NAIC model law mirrors New York's law and her department's actions "helped move the needle" to getting it nationally adopted. Now, Vullo said, it is up to states to implement it themselves.

In 2018, Vullo said that for the industries she regulates, including banking, financial services and insurance, a major challenge will be using technology safely and efficiently.

"Industries have an ongoing challenge of using technology," Vullo said. "How do you use data? How do you use tech you have to be more efficient in your processes and underwriting? That's the question going forward."